According to Motilal Oswal, Astra Microwave is undergoing a transformation from a subsystem manufacturer to a full-fledged system solutions player. The brokerage foresees long-term opportunities across defence, radar systems and space-based applications, with significant revenue visibility supported by a strong order book and upcoming project pipelines.
The target is based on 38x Dec’27 earnings estimates, and the brokerage notes that this multiple reflects a 15% discount to the target multiple of larger defence PSUs, attributing the discount to AMPL’s smaller size.
Here are 8 key reasons highlighted by the brokerage to support its positive view on the stock:
1. Transitioning from subsystems to full systems player
Motilal Oswal notes that AMPL is moving up the value chain, evolving from a subsystem supplier to a complete system-based player. The company is targeting opportunities in AESA radar, Uttam radar, counter-drone solutions and meteorological systems, with repeat orders expected from the Indian Navy and other defence agencies.
2. Healthy addressable market across segments
AMPL is eyeing a total addressable market of Rs 240–250 billion across defence-related sectors until FY28. Motilal Oswal highlights that the company is actively participating in Make-II programmes of the Indian Air Force and Army and is targeting major radar system upgrades, including QR-SAM, Uttam radar for Tejas Mk1A and the Virupaksha AESA radar.
3. Strong revenue visibility over the next 4–5 years
AMPL is targeting large order flows worth Rs 14–15 billion from QR-SAM, Rs 10 billion from Uttam radar and Rs 15–16 billion from electronic warfare systems. Execution of these orders is expected to scale up during FY27–30, as per the brokerage. AMPL is also expected to benefit from meteorology-related orders under Mission Mausam and satellite launches.
4. Diverse and expanding product portfolio
According to the report, AMPL has developed capabilities across a broad product suite ranging from radar systems, antennas, telemetry subsystems and EMI/EMC testing to electronic warfare and space-related hardware. It is also a critical partner of Bharat Electronics (BEL) for EW systems and supplies subsystems to various fighter aircraft platforms.
5. Robust order book and strategic alliances
Motilal Oswal states that AMPL’s current order book of Rs 22 billion provides strong revenue visibility for the next three years. The company has also entered strategic joint ventures (JVs) with partners in emerging areas such as anti-drone systems, navigation chips and EW systems, with global players like Rafael Advanced Defense Systems.
6. Strong client base
AMPL boasts a diversified client base including marquee names such as Bharat Electronics, DRDO, BrahMos, BDL, HAL, Adani Defense and various defence wings of the Indian government. Its international clients include Raytheon Technologies, Rafael and Elbit Systems, strengthening its position in both domestic and export markets.
7. Focus on working capital efficiency
The brokerage notes that management is actively targeting a reduction in working capital, particularly receivables, to improve cash flows. Receivables worth Rs 1.7 billion are expected to be collected in FY26, leading to improved operating efficiency.
8. Strong financial outlook with margin expansion
AMPL reported a 13% revenue CAGR over FY21–25. Its EBITDA margin improved significantly to 25.6% in FY25 from 12.3% in FY21, driven by high-margin export orders. Motilal Oswal expects revenue, EBITDA and PAT to grow at 18%, 19% and 23% CAGR, respectively, over FY25–28. RoE and RoCE are estimated to remain in the 13–17% range by FY28.
Key risks
Motilal Oswal believes Astra Microwave is well positioned to capture long-term growth in defence electronics. However, it flagged risks such as delays in awarding larger platforms, lower government defence spending and supply chain disruptions.
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